It might just be that "you grew up". Kids still goes crazy every time I seem them in front of the gaming shelves like I was 15 years ago.
I agree with you, the jump from PS1 to PS2 wasn\'t all that impressive. I cant really comment on PS2 vs. PS3, I don\'t have an HDTV yet. The graphical improvement does look way better this generation than the last one.
The graphic and sound amelioration are a must to make you feel "part of the world" you are playing in. But that immersion is quickly broken when you see repetitive character behaviors. IMO, the next big step in the gaming industry and game developer, will be the improvement of AI and world animation. Oblivion tried to do this well, and it succeed.. but It as to be better and bigger.